Browse Proptionary encyclopedia

Build your real estate vocabulary to be able to communicate and invest more effectively and professionally.

Pocket Listing

DEFINITION

A pocket listing is a property where a real estate agent holds a signed listing contract exclusively with the seller, whether that be “Exclusive Agency’ or ‘Exclusive Right to Sell.’ This means that only the agent holding the listing may attempt to sell or negotiate a contract with a potential buyer. A pocket listing is never added into a multiple listing system (MLS), or advertised. This gives the agent that holds the listing the ability to choose what other agents and potential clients get access.

EXPLANATION

Pocket listings can range in any price and are chosen for a variety of reasons by sellers. Agents often know about pocket listings within their own companies or offices but do not share the information openly. Pocket listings are frequently spread by word of mouth.

There are also agreements in which a seller allows the company to try to obtain both the listing and the selling side of the commission, or ‘both sides of the transaction. This makes the transaction easier for the seller and financially more advantageous to the agency.

There are many several kinds of contracts available for working with listings, whether private or public. A real estate company without MLS membership may have pocket listings but be willing to work with other brokers to help with the sale of their properties in order to gain commission or publicity.

Currently some agencies have begun providing private pocket listings for investors and the public that allow them to be dual agents in the sale. In fact, some agencies have even been seeking to scale the private listing process since pocket listing is growing and frequently used for high-end properties. In some cases, agencies may attempt to put together their own system of property listings not accessible to the public or the national property database. Because of the typically personal nature of pocket listings, maintain an oxymoronic ‘public database of private listings’ can be challenging.

Benefits of Pocket Listing

There are several key benefits for sellers of pocket listings.

–              Maintaining privacy. Some sellers may not want to share the fact that they’re selling, nor may they want to have images of their homes on the internet. High profile clientele like celebrities may choose this approach. Keeping a pocket listing is also a good way to screen potential buyers to ensure they’re qualified and interested.

–              Creating a sense of exclusivity. For some buyers, exclusivity may be appealing and motivating in making an offer.

–              Allowing for higher selection of buyers. If a seller is on the fence about selling, they can be more selective about the types of people they choose to invite to make an offer.

–              To gain a better deal on commission. If a broker doesn’t have to invest as much time or energy on selling the property, a good negotiator will likely be able to knock a few percentages from their fee up selling.

–              Testing the market. This is a great way to see what a property might bring in before choosing to advertise. This will reduce the likelihood of having to reduce the price.

–              To spend less time on the market. Knowing the market reduces the amount of time the listing has to publicly sit on the MLS. This will reduce potential stigma if a property remains on the market for an extended period.

–              Extra push to sell. A pocket listing is a way of expediting a sale through connecting a motivated buyer with an exact property type. This in turn motivates the seller in case they aren’t sure whether they’d really like to sell. This creates the potential for an easy transaction without the hassle of showings or marketing.

Pocket Listing Contract Comparisons

An “Open Listings” agreement is Agreement between a property owner and a real estate agent whereby the property can be sold by any broker who can bring in a satisfactory offer or can advertise, show, or negotiate a transaction.

An “Exclusive Right to Sell” is an agreement whereby a broker will agree to cooperate with other brokers to share a portion of the real estate commission.

In an “Exclusive Agency” agreement, only the broker with the listing may have the right to sell the property, and no other broker is offered commission. This type of contract typically pertains to pocket listings. A property under an exclusive agency agreement will not be placed into an MLS.

[quiz-new]